On January1, 2013, Candy Cain s Candy Company, a company that produces candy for specific events and holidays for large corporations, is solely owned by Candace Cain had the following account balances in their general ledger (see attached page of T-accounts):

During the month of January, the company engaged in the following transactions:

Jan 2 Received $3,600 cash from customers as payment on account.

Paid $5,000 towards a new vehicle that costs $30,000. The remainder was borrowed from the bank.

5 Candace deposited a dividend check of $500 into her personal account.

9 Payday—employees are paid a total of $3,200 for a two-week, 8 hours a day, 5 days a week work schedule; some of which is for work performed in December. (HINT: Look in the General Ledger)

12 Candy Cain s Candy Company received $12,000 cash from customers for services to be rendered in April.

13 Paid $600 for six months of ads in the Candytime a magazine for candy makers, with ads to be run monthly, starting this month

14 Purchased an insurance policy that covered the company for two years, $7,200.

15 Purchased supplies on account, $3,000.

16 Recorded serviced rendered on account of $15,000.

20 Received $6,000 from Mardi Gras Parties, Inc. for services rendered.

21 Paid for 80% of the CURRENT balance in Accounts Payable.

22 Received $10,000 from customers on account.

23 Payday employees are paid a total of $3,200.

28 Paid $300 utility bill for January; Paid landlord, who raised the rent starting February 1 to $750.

29 A new employee was hired to help with the marketing of products. She starts on February 1st, she will be making $1,500 per week working Monday through Friday

31 Candace received $5,000 from the company as a dividend in lieu of salary.

Step-by-step through the accounting cycle:

Write journal entries for each transaction listed above on notebook paper: This is your General Journal.

Post each transaction to the ledger, checking off each entry as you enter it into the ledger

After all entries are posted, then strike a balance in each account. Each one should have its normal balance.

Prepare an unadjusted trial balance on the worksheet provided to test DR = CR (follow model in Chapter 4 or in lecture notes) recording only the DR or CR balances for each account. If DR don t = CR, find your errors. This should total $128,153 and the Cash balance should be $5,103.

Prepare adjusting entries in the General Journal at the end of January. Note that the problem is based on the actual calendar for January 2009. Some useful information follows:

1) Depreciation is for the month is $433.

2) Unearned Fees at January 31 are $10,000.

3) Supplies on hand at the end of January total $2,200.

4) Prepaid Insurance balance includes a policy that expires $400 per month.

5) Record accrued salaries for one last week of January 31.

6) Record the expiration of one month of insurance on the new policy.

7) Accrue interest on the note payable of $250.

8) Adjust for expired rent

9) Adjust for advertising services received.

Be sure to SHOW CALCULATIONS for these!!! Round to nearest dollar!

Record the adjusting entries in the adjustments columns on the worksheet and also post them to the General Ledger. Strike new balances in the accounts in the GL.

Then add/subtract the adjustments as appropriate from the unadjusted trial balance to the adjusted trial balance (are these amounts the same as the balances you found in the ledger in part f.?) Follow model provided in the text.

Test to see if DR = CR in the Adjusted Trial Balance columns on the worksheet. If not, find your errors.

Sort amounts out from the adjusted TB to appropriate columns (Income Statement and Balance Sheet) on the worksheet. Find balances in each column. Do DR = CR here? And why not However, is the difference between the two sets of columns the same? (It should be equal to $9,717)

Prepare three financial statements: Income, Statement of Owner s Equity, and Balance Sheet in GOOD FORM. Use examples in the textbook.

Now write all necessary closing entries in your General Journal and post them to the General Ledger

Finally prepare a Post-Closing Trial Balance (see Blackboard Course Materials for an example) to test the accuracy of the journalizing/posting of the closing entries.